Special investigation: How an undercover agent infiltrated the casino VIP lounge and led police to a sprawling underworld network flooding Auckland with drugs.

Felix Lim had fingers in lots of pies.

The businessman ran a decorating crew, painting and plastering homes around Auckland.
He bought and sold New Zealand wine.

He enjoyed gambling, either a flutter on the horses, or at one of SkyCity casino's VIP rooms.

There he talked of importing expensive European cars cheaply from a bankrupt business in Malaysia and dabbling in the sale - and use - of sex pills made from ginseng and tiger testicles.


Police suspected the 55-year-old was on the periphery of a criminal network distributing pseudoephedrine, a Class B drug used to make methamphetamine, across the city.

But never in their wildest dreams could drug squad detectives imagine the wheeler-dealer would unwittingly help them dismantle a sprawling syndicate smuggling "pink", as criminals call it.

Most of the individuals identified had never been in trouble with the police, or even on their radar.

Two inquiry teams under the umbrella of Taskforce Ghost worked their way up from Lim, who acted as a broker.

They listened to his phone calls to identify key players in each network and gather evidence against them.

Each team seized a cache of the pink granules weighing around 250kg.

Each was disguised as bags of cornstarch or breadcrumbs from China.

Each was big enough to dwarf the largest shipment of pseudoephedrine previously found in New Zealand.


In total, Taskforce Ghost seized 744kg - enough to cook 22.5 million hits of P - smashing all records.

The police identified other shipments, dating back years, which slipped through the border using a similar modus operandi.

Cash and assets worth more than $20 million were seized.

After four separate trials, more than 30 people were convicted and sent to jail.

As far as exposing New Zealand's underbelly goes, Taskforce Ghost was "right up there", in the typically understated parlance of a career detective who plays his cards close to his chest.

Bruce Good retired a few months ago, just short of 40 years with the police - the last 16 in charge of tackling organised crime in Auckland.

Sixteen years dominated by the explosion of the methamphetamine market.

He rates Ghost as one of the best investigations on his watch.

"Ghost was a significant blow to Asian organised crime. It didn't stop the flood but it was certainly a hiccup."

Flying under the radar

Detective Inspector Bruce Good. Photograph / Nick Reed.
Detective Inspector Bruce Good. Photograph / Nick Reed.

Taskforce Ghost started with a man called Joe Arama.

His true identity is secret but the "special duties constable", more colloquially known as an undercover cop, was tasked by his handler to cultivate a relationship with Felix Lim.

Under this assumed identity, he posed as a drug dealer from Wellington and immersed himself in the Auckland underworld to build credibility and gain his target's trust.

The pair would meet at the Denny's diner on Hobson St, diagonally opposite SkyCity, where Lim provided samples of pseudoephedrine or methamphetamine.

Other meetings took place in a VIP lounge at SkyCity casino, where Lim took Arama as his guest.

There he was introduced to "Baldy Mark" and others in the scene, almost exclusively of Asian ethnicity.

One conversation turned to the best ways to spot an undercover agent.

"They advised me to be suspicious of Asians," Arama said wryly while giving evidence in Baldy Mark's trial at the Auckland District Court.

Once Arama established a rapport with Lim, talk turned to drugs.

This wasn't to entrap Lim, who police knew was a small player, but to identify bigger fish.

One phone conversation recorded in May 2013 gave police their first break.

"I'm going to see a guy, how about the pink stuff?" Arama asked Lim.

"How much for five?"

They were talking about five "sets" of ContacNT, a cold and flu medicine widely available in China.

The five sets of pseudoephedrine the undercover police officer purchased for $46,500. Photo / Supplied.
The five sets of pseudoephedrine the undercover police officer purchased for $46,500. Photo / Supplied.

A set is 1000 capsules of the pink, yellow and red granules weighing 223g.

The capsules contain pseudoephedrine, the key ingredient in methamphetamine. Once the active ingredient in New Zealanders' favourite cold and flu medicines, it's now illegal here.

Each set sells for between $8000 and $10,000 on the black market here. Lim normally sold no fewer than 10 sets at a time.

(Asked why Arama asked for half the normal amount, Detective Sergeant Mike Beal told the first trial to result from the operation: "In simple terms, New Zealand police couldn't afford that.")

After hanging up on Arama, Lim was straight on the phone to his supplier.

"Someone asked me about red wine, half a bottle."

See Meng Hoo, aka
See Meng Hoo, aka "Baldy Mark", (right) with his buyer Chee Eng Tan. Photo / Supplied.

He was talking to Baldy Mark, real name See Meng Hoo, so the police started listening to his phone calls too.

More code: "Felix is taking five friends to yum cha," Hoo said to someone later identified as Van Thanh Tran, who gave his blessing to the deal.

This was the police "working their way up the tree", according to David Johnstone, Crown prosecutor in the first trial to result from the operation.

"Peter" Tran was at the top of this particular tree but was not the only big player in town, as Taskforce Ghost would uncover later.

A deal was struck. Arama would pay $46,500 for five sets of ContacNT, so Lim drove him to Baldy Mark's home in Ellerslie where the cash and drugs were exchanged.

"Clearly, they were not talking about yum cha," said Johnstone.

The police kept listening and watching, learning more and more about Tran and his drug-dealing empire.

Van Thanh Tran (right) with See Meng Hoo. Photo / Supplied.
Van Thanh Tran (right) with See Meng Hoo. Photo / Supplied.

He sold in bulk to wholesalers with their own distribution networks, like Chuck Lou Tarm and "Alex" Zhi Tong Li.

But Tran kept his hands clean by using lieutenants like the Ma brothers, Ziyang and Zigeng, to keep his stockpiles safe and deliver packages on his instructions.

Hoo believed Tran kept a 500kg stockpile, Arama told the court; an amount which dwarfed anything ever seen or heard of by experienced drug detectives. But where?

'The almost perfect' crime

Over several months, the intercepted phone calls and physical surveillance helped police piece together a picture of Tran's network.

Even if the operation had ended then, Taskforce Ghost would have been considered a success.

But detectives had still not worked out how so much pseudoephedrine was getting through the border.

Eventually, their patience paid off.

Sitting and waiting on Tran's phones - he used 10 different cellphones over the course of the investigation - led police to identify Da Wen Shao, also known as "Tall Man".

Da Wen Shao (right) spotted with Van Thanh Tran. Photo / Supplied.
Da Wen Shao (right) spotted with Van Thanh Tran. Photo / Supplied.

Physical surveillance of these two brought Yixin "Lonna" Gan into play - and identified a gaping loophole in our border control.

In opening the Crown case against Gan, prosecutor Scott McColgan said the 35-year-old mother-of-three discovered an "almost perfect way" of importing drugs into New Zealand.

She ran a legitimate business shipping food, including cornstarch, from China to Tonga, with a short stop in New Zealand.

Shipments arrived at the Ports of Auckland before being trucked to a Customs-controlled warehouse at the Auckland International Airport.

Once there, legitimate consignments were repackaged by freight companies before being sent to their final destination.

"But what if you had an inside man in the Customs-controlled area?" McColgan asked the jury.

Gan did. His name was Mosese Uele.

Yixin Gan with her 'inside man' Mosese Uele. Photo / Supplied.
Yixin Gan with her 'inside man' Mosese Uele. Photo / Supplied.

Police watched as he drove a van into the warehouse of his freight-forwarding company Ezi World Cargo.

Believing the van to be full of pseudoephedrine, police broke into the warehouse in the middle of the night to discover the boxes really were full of cornstarch.

They were puzzled for several days. Until they tailed the van to two homes in Auckland and raided them.

Around 205kg of pseudoephedrine was found at one address, 46.5kg at another.

It turned out, inside the warehouse Uele switched the pseudoephedrine smuggled from China with the dummy consignment of cornstarch destined for Tonga.

The freight containers were not inspected by Customs because Gan's shipments were shown as goods in transit - and therefore not technically coming through the New Zealand border.

The price to exploit this loophole? $60,000 in a brown envelope.

"It was too great ... [I was] too greedy," Uele told Gan's trial.

The quartet involved in the smuggling scam - Uele, Shao, Tran and Gan - all received long jail sentences.

Tran was sentenced to 13 years and eight months and that was after a discount for a guilty plea.

Justice Geoffrey Venning described meth as a "blight on our community" and said Tran supplied millions of dollars' worth of the key ingredient needed to cook it.

"You took a business risk that you might be caught. And you have been."

A trail of breadcrumbs

While all that was unfolding, Felix Lim led a second drug squad in a completely different direction.

While listening to the bugged telephone conversations from the infiltration of Joe Arama, police heard Lim book a table at a Chinese restaurant in downtown Auckland.

That brought Hui Zhang into play.

Hui Zhang. Photo / Supplied.
Hui Zhang. Photo / Supplied.

Police launched a new phase of the inquiry, codenamed Operation Gem, which led to the backdoor of the restaurant. The name of the restaurant is suppressed.

As well as monitoring telephone calls to the restaurant, detectives placed a covert camera across the road to capture drug deals taking place in the car park.

They gathered surveillance photographs of Lulu Zhang, Hui Zhang's girlfriend, passing a bag containing newspaper-wrapped parcels to a man called Guo Pei Chen as he sat inside a silver Lexus.

When Hui Zhang was out of the country, Lulu Zhang controlled supply.

Chen was a loan shark and dealer who bought drugs from the syndicate to sell to his own network.

Police intercepted calls from Chen to the restaurant. They weren't always about lunch or dinner.

If Chen booked a table for 12, he was actually asking for 12 sets of pseudoephedrine.

Lulu Zhang. Photo / Brett Phibbs.
Lulu Zhang. Photo / Brett Phibbs.
Guo Pei Chen. Photo / Brett Phibbs.
Guo Pei Chen. Photo / Brett Phibbs.

Lulu Zhang would then ask "the delivery man", Ziyang Ma, for $1200 - another code for 12 sets - which he collected from a safehouse in Botany Downs, then delivered to the restaurant.

Ma was also running drugs for Van Tran, who had his own separate empire. Clearly there was enough business to go round.

The most significant piece of evidence in Operation Gem wasn't money or drugs, it was breadcrumbs.

When police raided Hui Zhang's safehouse in Botany Downs, they discovered a locked box.

It contained 47 sets of pseudoephedrine - 47,000 ContacNT tablets - wrapped in newspaper.

The packages were placed in empty packets of "chicken breader".

After analysis of shipping documents, detectives concluded that a container holding 153kg of "chicken breader" delivered to Zhang's restaurant in May 2013 was in fact pseudoephedrine.

Then they realised another shipment was on its way.

Ten days after Zhang's arrest in December 2013, police and Customs stopped the container when the ship docked at the Ports of Auckland.

Inside were packets containing 235kg of pseudoephedrine and 15kg of pure ephedrine, an ingredient that allows meth-makers to cut a step out of the cooking process.

Pseudophedrine hidden inside bags of bread crumbs. Photo / Supplied.
Pseudophedrine hidden inside bags of bread crumbs. Photo / Supplied.

"[It was] a massive seabound shipment that Zhang needed to breathe life into his business," Crown prosecutor Bruce Northwood told the jury in the resulting trial.

Zhang, 44, was convicted last year of importing 403kg of ContactNT in two shipments - a record amount and enough to cook $116 million of P. He received a jail sentence of 20 years.

At sentencing Justice Kit Toogood said Zhang was driven by greed and had given no thought to the damage caused to those who used the end product.

"The massive scale of your offending has no precedent ... the misery and harm of such a pernicious and highly destructive drug is incalculable."

Winning the War on P?

Hui Zhang's sentence was the longest ever for Class B drug offending in New Zealand.

It could have been more.

He was acquitted of importing a third shipment weighing 91kg hidden inside a water cylinder, despite his fingerprints being found on one of the silver packets.

Hui Zhang was acquitted despite his fingerprint being found. Photo / Supplied.
Hui Zhang was acquitted despite his fingerprint being found. Photo / Supplied.

That was one of the largest seizures of pseudoephedrine in 2012.

The suspicious Customs officers who found the haul among cargo at Auckland airport had every right to be pleased.

Stopping drugs from coming into the country is a core role of the Customs Service and one that's carried a political edge since Prime Minister John Key set up a cross-agency taskforce to tackle the P epidemic in 2009.

A few days after the cylinder find, Customs issued a press release to say fewer precursor drugs - the ingredients needed to cook meth - were being discovered at the border.

There was also a reference to surveys which indicated P was harder to find and less popular.

The media statement said that was a "direct result of border activity".

The message was clear: Customs was finding less pseudoephedrine, because there was less to find.

But Key's taskforce group thought differently.

In October 2013, the Tackling Methamphetamine report from the Department of the Prime Minister warned that although smaller amounts of pseudoephedrine were being found, this did not necessarily mean less was being smuggled into New Zealand.

"The ongoing decline in the quantity of precursors seized is likely to be a reflection of a change in modus operandi by the syndicates involved, rather than an indication of reduced quantities entering New Zealand," it said.

In December 2013, a Customs staffer set an anonymous email to the Herald. It said managers were "quietly panicking" because "hard questions" were "inevitable" about why the agency failed to intercept large quantities of tablets seized by Taskforce Ghost.

A rare acknowledgement of any potential problem was a few lines in a subsequent briefing to incoming Customs Minister Nicky Wagner.

While the methamphetamine market was "no longer expanding", officials told her imported pseudoephedrine were still reaching cooks.

"The detection of a large precursor shipment in sea cargo in late 2013 (Operation Ghost) suggests a shift between pathways and reinforces the need for Customs to continually refine its targeting."

Customs' current head of investigations and intelligence, Jamie Bamford, said the press release was correct at the time.

Less pseudoephedrine was being seized at the border because criminals were switching to ephedrine, which allowed them to speed up the cooking process.

Since then, Customs had focused on building stronger relationships with other countries to stop drugs even reaching New Zealand.

"There are record amounts of drugs being seized at the border," said Bamford.

"Our challenge is going up against inventive and clever criminals constantly looking to exploit supply chains. And we feel we're doing that. New Zealand is not alone in having a P issue."

Customs and police seized more than 334kg of the Class A drug last year, nine times the amount found in 2013.

But that record was blown out of the water in June when police stumbled across 494kg of meth on Northland's 90 Mile Beach. Most was packed in bags left in an abandoned campervan, 50kg was buried in sand dunes.

The record methamphetamine bust of nearly 500kg in Northland. Photo / Supplied.
The record methamphetamine bust of nearly 500kg in Northland. Photo / Supplied.

It was the biggest ever seizure of pure product in New Zealand, followed soon after by the second biggest - a Customs' bust of 176kg in October.

So is New Zealand losing the war on P?

Key's 2009 Methamphetamine Action Plan was a cross-agency approach overseen by his senior staff to address public concern.

One of the first steps was to stop cold and flu medicines containing pseudoephedrine being sold over the counter.

The price, purity and availability of the drug are key indicators of success, according to annual progress reports. However, those figures have remained relatively stable, perhaps even easier to buy P than it ever has been.

In November, the Prime Minister John Key announced an extra $15 million seized from criminals would be invested in anti-drug initiatives.

Asked whether this was an admission the previous strategies were failing, Key said "there had been quite a lot of debate in my office on this issue".

The official advice was the number of people using methamphetamine is dropping.

"What is fair to say, though, is that those who are using the drug are the hardened end. They are using more of it."

Rubbing shoulders in the VIP lounge

As well as stopping drugs coming into New Zealand, detectives decided to go after assets bought with dirty money.

Under the Taskforce Ghost umbrella, they launched Operation Galaxy, focusing on the financial affairs of the key players.

"This investigation initially focused on a number of VIP members at SkyCity casino, in particular, the flow of money related to drug transactions through the casino," according to an affidavit sworn by Detective Inspector Bruce Good.

"From my experience and numerous intelligence reports and organised crime investigations, SkyCity casino and, in particular, the VIP facilities are a recognised money laundering risk and an environment within which numerous drug distribution groups work, both alone and alongside one another."

Felix Lim first introduced undercover cop Joe Arama to "Baldy Mark" Hoo and other underworld figures in the VIP area.

At Hoo's trial, the casino was described by Detective Sergeant Mike Beal as the "geographical hub" of Taskforce Ghost, a place where those under surveillance gambled "millions of dollars, some, tens of millions".

"It's a central point where historically we have found members of the Asian community, who are involved in illegal activity, socialise."

The Herald has identified 12 Taskforce Ghost targets who frequented the casino's high-roller lounge or were frequent gamblers.

Some, such as "Peter" Tran, even tried to blame their dealing on their gambling addiction in a bid to get a lighter prison sentence.

At his trial Tran was described as a "big gambler" who once lost $800,000 in a week. SkyCity records show he spent $15 million in a 15-month period losing more than $1.1 million.

Millions of dollars were seized in Taskforce Ghost. Photo / Richard Robinson.
Millions of dollars were seized in Taskforce Ghost. Photo / Richard Robinson.

Operation Ghost did not uncover evidence of drug deals taking place inside SkyCity but it's not the first time they've been linked in court.

In response, SkyCity said it was "extremely comfortable" the casino had met obligations under anti-money laundering (AML) and problem gambling laws.

A spokesman said the casino could not comment on individuals targeted in Ghost and Galaxy for privacy reasons and because of strict disclosure rules in AML laws.

But he confirmed "a number of those people did come to our attention on several occasions".

"We were co-operative with the police from the start of this investigation. We are extremely confident that we took all appropriate actions under AML requirements and also that we took proactive steps from a host responsibility perspective."

These steps - some of which predated Ghost - included staff interventions, interviews, monitoring and, in several cases, banning people from the casino. Staff were also instructed to report immediately suspicious transactions to the Police Financial Intelligence Unit.

"Only a few of the group of players identified by police were regular visitors to the casino, and the level of their play varied widely," the spokesman said.

"In most cases their turnover was not out of the ordinary for local VIPs."

The Puppet Master revealed

Yixin Gan. Photo / Jason Oxenham.
Yixin Gan. Photo / Jason Oxenham.

The final piece of the Taskforce Ghost puzzle slotted into place on October 4, 2016.

Three years to the day after the 250kg shipment of ContacNT slipped into the country, Yixin "Lonna" Gan, the woman described at sentencing as the "puppet master" of the smuggling loophole, was jailed.

In sentencing Gan, Justice Mathew Downs left no doubt as to whom he thought was sitting at the very top of the tree.

"Intelligent, worldly, even shrewd", Gan received the "super profits" - there was evidence of $7 million in cash deposits in various bank accounts - while leaving the dirty work of distribution to the likes of "Peter" Tran.

"The Crown contended to the jury this was 'a near-perfect scam'. There was no overstatement in that language; you were caught only by chance," said Justice Downs.

"I am sure, which is shorthand for satisfied beyond reasonable doubt, you were the primary architect - at least in New Zealand - of the October 2013 importation."

With those words, Gan was sentenced to 14 years in prison and one of New Zealand's most successful investigations ended.

But there was one loose end.

What about Felix Lim, the small-time wheeler and dealer who unwittingly led police to Gan, "Tall Man" Shao, "Peter" Tran and more than 30 others?

His name cropped up regularly in those four, long trials, but the irony is Lim never stood in the dock with the others.

He left the country three months before Taskforce Ghost was ready to raid those they were watching.

He hasn't come back.